The Singapore Budget 2013 came out a couple days ago and it was pretty meh. Even my mom wasn’t really happy with it as she has to pay higher property taxes now.
Hey wait, I mean, I have to pay higher property taxes now cos I’ve taken over paying all the household and daily expenses -_-
Ah and my colleagues and I were just talking about this topic of how the Singapore Budget has affected potential new car owners a couple of days ago. And it can be said, it is of an issue of discontent amongst most people at the moment
For a fact – it’s already bad enough that the COE (Certificate of Entitlement) prices are crazy expensive, now after the budget, it’s now even more difficult to afford a car in Singapore.
If you were wondering about why and how the budget will affect us as a future car owner – here’s a rundown as taken from Cheryl Tay at Yahoo NewsRoom:
First, the Monetary Authority of Singapore (MAS) has restricted financing for motor vehicles. Buying a car now requires a down payment of 40 to 50 per cent of the car purchase price in cash, including relevant taxes and the COE. In addition, the tenure of the loan has been changed to five years instead of 10. These revisions apply to both new and used cars, but not to motorcycles and commercial vehicles.
It was also announced that there will now be a tiered tax rate for passenger cars. Instead of all cars paying the same main vehicle tax (or known as additional registration fee or ARF) at a flat rate of 100 per cent of the car’s open market value (OMV), more A tire For example, a Mercedes-Benz E250 which has an OMV of above $50,000 will need to pay 180 per cent of incremental OMV.
Tiered Additional Registration Fee (ARF) for passenger cars and taxis
These cooling measures make car ownership even tougher for the average Singaporean.
Not forgetting, there is the Carbon-based Emissions Vehicle Scheme (CEVS) that will start imposing penalties for cars emitting above a certain level of carbon dioxide from July onwards.
Some banks have also raised their interest rates.
MAS said its motor vehicle loan restrictions are meant “to encourage financial prudence of car buyers” so that people don’t end up over-extending themselves, but some feel that there are greater societal and commercial effects resulting from this.
A lot of unhappiness and resentment have been circling on the ground, with many exclaiming that these measures will only serve to widen the gap between the rich and the poor.
An extremely avid car enthusiast, who declined to be named, was left feeling utterly disappointed on Monday night, hours after the budget speech. He said, “I was planning to buy a BMW M3, but right now all hopes are gone. I was intending to migrate but decided to stay put and get a car, however, these measures just killed everything. For a brand new M3, I would need to fork out about $200,000 up front for a 50 per cent loan. I think it is time to put that migration plan into place.”
People will be forced to rethink their priorities and only those who can truly afford a car will be able to do so now.
A larger initial cash output might also lead to people buying a smaller car instead of a bigger car that the same down payment amount could fetch previously. That would mean seeing an increase of small cars in the city and making exotic cars more exotic than before.
“This will really force people to realign their priorities. It is one thing to prevent us from overstretching ourselves financially, but it also severely limits the purchase options,” said Yit Beng, 28, who is in automotive-related sales.
He added, “Young couples, families and sales personnel who need their vehicles for their jobs will be the worst hit. Already the amount of cash on hand is low, with the short loan period now and the increased interest rates, these all make for a recipe for disaster.”
Indeed, the hardest hit will be on people who really need the car, such as those with children, elderly or requiring a car for their businesses. Businesses may be forced to get commercial vehicles and people may have to start whipping out their EZ-link cards more often.
The car market will have to look into things such as revamping the pricing of cars and deciding whether to pass on the entire incremental ARF to consumers.
It is understood that some car distributors are negotiating with their principals for better pricing so that they do not need to pass on the incremental ARF to consumers directly.
Business will also be greatly affected with less people able to buy cars. Those who are looking to sell their cars may be stuck too.
A used car dealer I spoke to said that he might end up having to fold the business. He said, “I’m only a small-timer in the field but this is enough to kill my business. Those used car dealers with big inventories will run into bigger problems now.”
COE bidding for the months of March and April have been revised to allow consumers and the motor industry more time to adjust to the changes. With the demand for cars down, COE premiums might drop. Hopefully in the long run, the COE prices will be brought down and help to offset car prices.
Ya, there you have it. And as a typical Singaporean, these are the common reactions/comments after reading this article:
“Want to drive, cannot. Want to take MRT, kenna breakdown. Want to take bus, too crowded because of the MRT breakdown,” (and don’t forget our predicted 6.9m population in the future!)
“Want to ride bicycle to school, scared kenna knocked down. You tell me how?
Other than the prices of cars, and our future 6.9 million population in the future… Did I mention about the crazy prices of HDB houses too?! Ya, HDB prices for a 4R flat has just hit $800k.
So don’t be surprised to see prices hit 1 million for a HDB down the road.
And who is going to be affected the most by this? Young people like US!
How are we, as the future generation of Singaporeans going to survive this? Everything is increasing in price and these are just the basic necessities – house, food, bills, education, blahblahblah (basically everything) and now, cars.
I don’t really see our pay increasing that much to justify the escalating prices do you?
I am sure most of us fall under the middle income category in Singapore, and we are already so affected by it. Then what about the lower income families in Singapore?
And really, when you think about it and calculate from a perspective of a young adult who will most likely get married in the future:
Of course all these won’t be paid upfront, but in installments. But still, that’s looking at seriously quite a lot of money every month as you probably have to take a loan from the bank in the first place (unless you are filthy rich, then don’t bother reading this). And bank interest rates are increasing too!
Then don’t forget paying for the other basic necessities like household & utility bills, food, future childcare, education (and so much more) in the future? Ah then other (luxury?) stuff like credit card bills, occasional overseas holidays) etcetc?!
Hais
Just thinking about the future..it makes me envision us as slaves in the future working all our lives to pay for these.
No wonder more and more Singaporeans nowadays are migrating.
The Singapore Budget 2013 came out a couple days ago and it was pretty meh. Even my mom wasn’t really happy with it as she has to pay higher property taxes now.
